concepts in information management systems
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Concepts in EnterpriseResource Planning
Third Edition
Chapter Eight ERP and Electronic Commerce
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Concepts in Enterprise Resource Planning, Third Edition 2
Objectives
After completing this chapter, you will be able to: Describe business-to-business e-commerce Explain the importance of ERP to the success of a
company engaged in e-commerce Describe the function of an application service
provider (ASP) Describe the delivery of ERP services through an
ASP Describe Web services and SAPs NetWeaver
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Concepts in Enterprise Resource Planning, Third Edition 4
Introduction
Effectively competing in high-volume e-commercemay be impossible without the infrastructureprovided by Enterprise Resource Planning (ERP)
Companies can integrate ERP systems with theInternet and rent ERP software from special -purpose software companies
NetWeaver: SAPs Web services platform
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Introduction (contd.)
XML is becoming the new markup language of theInternet
Use of radio frequency identification (RFID)
devices in managing movement of goods in thesupply chain
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Concepts in Enterprise Resource Planning, Third Edition 7
Business-to-Business E-Commerce
Buying and selling between two companies overthe Internet
Companies might be manufacturers, suppliers,
wholesalers, or retailers Transforming the way companies work with each
other
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Business-to-Business E-Commerce(contd.)
Electronic Data Interchange (EDI) Electronic computer-to-computer transfer of
standard business documents
Been used by companies since the 1960s Value-added network (VAN) : intermediary Internet-
based network run by an outside EDI serviceprovider
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Business-to-Business E-Commerce(contd.)
Internet-based procurement Use of Internet technologies for procurement
activities
Benefits: Less expensive to use the Internet than private EDI
networks Purchasing costs further reduced as suppliers
compete for orders on buyers Web site
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Business-to-Business E-Commerce(contd.)
Internet- based procurement (contd.) Electronic marketplace : gathering place for buyers
and sellers on the Internet
Exchanges : one type of B2B electronic marketplace Typically, the focus is on a single industry
Private exchange One type of industry marketplace
Membership is restricted to select participants
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Business-to-Business E-Commerce(contd.)
Internet auctions and reverse auctions B2B e-commerce allows companies to do online
bidding through auctions and reverse auctions
Reverse auctions : one buyer and many sellers Internet-based auctions are changing the way in
which commodities are purchased Internet has replaced the intermediary
Pricing is open and dynamic
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E-Commerce and ERP
Each technology complements the other, and eachis necessary for success
Back-office processing
Efficient back-office operation is crucial for anycompanys success
E-commerce often exacerbates problems andreveals weaknesses in current back-office systems
Integrating Internet front-office operation and ERPback- office operation is fundamental in todaysbusiness environment
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Fitter Snacker and E-Commerce
Currently, Fitter Snacker has neither a Web-basedordering system nor an ERP system
FS executives looking at two IS investment options:
Implement a Web-based ordering system, or Implement an ERP package
If Web-based ordering system implemented withoutimplementing an ERP package: FSs unintegrated information system would not be
able to handle the additional Internet orders
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Fitter Snacker and E-Commerce(contd.)
An attractive Web site does not provide enoughbenefit on its own for an e-commerce business tostay afloat
Conventional back-office systems must be in placeand operating correctly for the business to flourish
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Using ERP through an ApplicationService Provider
Many companies today outsource some of theiroperations to an outside service provider
Outside service provider sometimes called a third
party Outsourcing can simplify management of ERP
systems
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Application Service Providers
Application service provider (ASP) : companythat provides management of applications for acompany over a network
Network is usually the Internet ASP owns the hardware and rights to the software ASP employs workers who run outsourced
applications Users of the system are the companys employees
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Figure 8-1 ERP responsibilities in-house versus with an ASP
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Application Service Providers (contd.)
Advantages of using an ASP Affordability Shorter implementation time
Expertise
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Application Service Providers (contd.)
Disadvantages of using an ASP Security Bandwidth/response time
Flexibility No frills Technical, not business focus
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NetWeaver
Web services : combination of software tools thatlets various programs within an organizationcommunicate with other applications
Also known as SOA, or service-oriented architecture Benefit of adopting SOA
Ability to add new applications quickly
Implementing SOA is not easy Return on an SOA investment is often difficult to
determine
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NetWeaver Tools and Capabilities(contd.)
Mobile Infrastructure Allows users to access and work with data through
mobile devices such as PDAs, cell phones, and
pagers Business Intelligence (BI)
Incorporates a data warehouse and data miningtools
Can be delivered in a personalized manner withEnterprise Portal
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NetWeaver Tools and Capabilities(contd.)
Master Data Management Provides data consistency within a companys SAP
system
Exchange Infrastructure Allows different applications to share data Companies dont have to write code to enable
different applications to transmit data
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NetWeaver at Work for Fitter Snacker
Amy Sanchez: salesperson, works from home She logs on to SAP system with her laptop
computer, using the SAP GUI
Donald Brown: salesperson, deals with distributors Tester for new NetWeaver SAP server Every day logs on to his Enterprise Portal Also uses SAPs Mobile Infrastructure and Business
Intelligence modules
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Duet
Microsoft and SAP have been working on Duet Intended to let companies access SAP data and
processes using the familiar Microsoft Office
interface Goal of Duet
Expand and simplify adoption of SAP ERP bymaking workers more efficient
Duet has numerous advantages
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Duet (contd.)
Duet brings its own challenges Companies must be using a relatively current
version of SAP ERP
Companies must run Microsoft server software May require company to use other SAP products
Growing competition between SAP and Microsoft inthe ERP software market
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Accessing ERP Systems over theInternet
ERP vendors now offer access to their systemsthrough a Web browser Web browsers such as Microsoft Internet Explorer or
Netscape Navigator Users and systems administrators find it much
more efficient to access ERP systems through thebrowser
Avoids the time-consuming installation of thestandard ERP GUI
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XML
Extensible Markup Language (XML) New programming language of the Internet Uses tags that define the data contained within them
XML-coded data can go directly from a Web pageinto a database Data does not have to pass through middleware or
be rekeyed into the system
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XML (contd.)
Internet pages written in Hypertext MarkupLanguage (HTML) HTML specifies only how your information will look
when viewed through a browser XML users can create their own tags
Customized tags in the document describe, ordefine, the data
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XML (contd.)
Figure 8-5 Fitter Snacker document in XML
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XML (contd.)
ERP systems now accept data in XML format Using XML, companies can transfer data from their
Web sites directly into their ERP systems
Streamlines data entry, reduces errors, and reducesserver loads
XML is very attractive to smaller companies Small companies often transfer data over telephone
lines or using fax machines Using XML makes electronic data transfer much
more affordable
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Radio Frequency IdentificationTechnology
Radio frequency identification (RFID ) technology Becoming an efficient way of tracking items through
a supply chain
RFID device: small package, or tag, that includes amicroprocessor and an antenna and can be attachedto products
RFID technology has become inexpensive enough
to be cost-effective Wal-Mart is in the process of implementing an
RFID system for its supply chain
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Radio Frequency IdentificationTechnology (contd.)
Pharmaceutical firms working toward adoptingRFID technology To comply with upcoming FDA regulations that
would require track-and-trace technology on all drugpackages to prevent counterfeiting Procter & Gamble is using RFID technology to
collect information about the sales of its products
SAPs ERP software is RFID -ready Through NetWeaver, SAP can integrate RFID data
into both SAP and non-SAP applications
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Summary
E-commerce is transforming the way companies dobusiness Business-to-consumer e-commerce can:
Streamline a companys ordering operations Record information about customers
Business-to-business e-commerce is changing theway companies buy and sell goods
ERP is an essential component for all forms of e-commerce
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Summary (contd.)
Application service providers (ASPs) are allowingcompanies to use ERP without a large initialinvestment
Make ERP systems available to smaller companies Decision to buy or lease must be weighed carefully
Web services, or service-oriented architecture,offers a combination of software tools that lets
various programs within an organizationcommunicate with other applications
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l h d d
Summary (contd.)
SAPs Web services platform is NetWeaver Includes tools for seamless connectivity of diverse
applications through the World Wide Web
Users of ERP systems often access those systemsthrough a Web browser XML, or Extensible Markup Language, defines data
on a Web page
ERP systems are using XML to integrate systemsbetween suppliers and customers
RFID devices, or radio frequency identificationdevices, are used in tracking items in transit
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